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A Stock-Taking

I’d like to thank Bruce Benson, Dani Rodrik, and Randy Holcombe for participating in this discussion and for offering their insightful comments. By way of concluding, I will offer a few final remarks that I hope tie together several of the threads of commentary that followed my opening essay.

I want to highlight four major areas of our conversation, bringing attention to the points of agreement and disagreement in each. I do not intend to put words into others’ mouths or to indicate agreement or disagreement when this is not in fact the case. If I fail in this, I apologize in advance.

With that in mind, here we go:

1. There seems to be agreement that there is, at the very least, a tendency for individuals to develop private solutions to the obstacles that stand in the way of their ability to realize the mutual benefits of cooperation, even where government is absent. This is significant because it means that, at a minimum, anarchy is not a Hobbesian Jungle, but will instead tend to generate private institutions of order.

The disagreement is about what extent of cooperation such private action is capable of enabling. I have argued that evidence from the international arena suggests that this extent can indeed be considerable. To my recollection, no one has disagreed that international commerce is massive. If this is right, international commerce would seem, by itself, to affirm the ability of private governance to enable large scale exchange. The presence of relatively recent multinational agreements that in theory make private arbitral decisions enforceable in state courts does not affect this for two reasons. First, well before such agreements, international trade was already large. Second, ultimately such agreements rely on self-enforcement to work since there is no supranational sovereign to enforce them externally.

This affirmation does not answer the question of whether international exchange could be increased even further if some kind of ultimate supranational authority of enforcement for international commercial parties existed. But the current presence of transactions costs in international trade in the absence of this authority does not mean that such an authority would expand trade if it existed. If we allow for government actors, just like market actors, to be imperfectly informed and self-interested, another point we all agree one, a supranational authority of enforcement may not only fail to enhance commerce, but may in fact reduce it.

2. No one has contested the empirical claim in my initial essay that Somalia is better off stateless than it was before its government collapsed. Thus, there appears to be agreement that in some cases at least, anarchy generates better outcomes than government.

In my mind this is important because: (a) in a number of the world’s countries, government is not dramatically different than it was in pre-anarchic Somalia, suggesting the desirability of anarchy at least in these places, and (b) it demonstrates that the conventional wisdom that anarchy must always produce inferior outcomes to government is wrong.

The disagreement here is about whether Somalia is better off remaining stateless, or whether some attempt should be made to construct a new government in the country that resembles one of the few well-functioning states in Sub-Saharan Africa, such as the one in Botswana.

One suggestion is that the success of well-functioning government in Botswana implies that well-functioning government in Somalia is also possible. Accordingly, we should try to construct a well-functioning government in Somalia to remove it from anarchy. The other suggestion is that Botswana, and more generally countries with well-functioning governments throughout the world, face very different constraints on what kind of states they may have than Somalia does. Due to this difference in constraints, it would be very unlikely to get a well-functioning government in Somalia if a new state were constructed there. Instead, such efforts would likely lead to a highly dysfunctional government, not unlike government in Somalia’s past, which we know produced worse outcomes for the country than anarchy. Thus, anarchy is a constrained optimum for Somalia and should be allowed to persist.

3. Everyone agrees that government has grown larger. I also believe that everyone agrees that there are no examples of countries that have become very wealthy under anarchy. There is disagreement, however, as to whether this fact shows that anarchy is inconsistent with prosperity or not. One view sees the absence of wealthy anarchies and historical growth of governments that attended increases in wealth as evidence that only government is compatible with increasing standards of living. The other view, summarized nicely by Bruce, sees the growth of government as following parasitically on the growth of the economy. In this view, prosperity occurred not because of state intervention, but rather despite state intervention, or because state intervention was low. I will not go into this matter further here other than to note that my arguments supported the second view.

4. Despite some fundamental disagreements about the desirability of anarchy and its ability to generate prosperity, there seems to be universal agreement with Randy that: (a) anarchy is not politically possible, and (b) that anarchy may not always be stable. It was suggested, and I think correctly, that (a) stems largely from the fact that most people do not believe anarchy is capable of adequately supplying services government has traditionally provided. It was argued with respect to (b) that the very forces responsible for the growth of government noted above may very well lead anarchy to devolve into a state even if it is superior in terms of individuals’ welfare.

I will only make two remarks here, both of which echo my earlier comments. First, the political feasibility of anarchy does not in any way bear on the question of anarchy’s superiority (or inferiority, depending upon one’s position) to government. Second, the (in)stability of anarchy is not unique to anarchy but seems to equally plague all forms of social organization, including the limited government form advocated by non-anarchist libertarians.

Parting Words

Anarchy deserves our attention. It should not be ignored; nor should it be summarily dismissed on the grounds that government is “obviously” always superior. Although this discussion has seen significant disagreement about anarchy’s effectiveness, I hope that it highlights the openness of the matter and why it is one worth considering.

Also from This Issue

Everybody seems to know we need government … But pirates didn’t! How did they manage without the state? In this issue’s thought-provoking lead essay, Peter T. Leeson, the BB&T Professor for the Study of Capitalism at George Mason University, explores what pirate “constitutions,” credit institutions among 19th century African bandit traders, and the well-being of Somalians after the collapse of the Somalian state have to tell us about the possibility of practical anarchy. It works better than you think, Leeson concludes. “As long as there are unrealized gains to realize, people will find ways to realize them” – state or no state.

Bruce L. Benson, author of The Enterprise of Law: Justice Without the State, argues Peter Leeson’s defense of anarchy is too moderate. Governments in developed nations, Benson maintains, are not better than ordered anarchy. Drawing on Franz Oppenheimer’s classic account of the state as a protection racket, Benson argues that the state only seems necessary because it offers “solutions” to problems the state itself creates. Benson claims that even well-constrained states are essentially parasitic, leading him to conclude that “even when a relatively ‘good’ government exists, there still is way too much government and not nearly enough anarchy.”

Harvard economist Dani Rodrik is willing to accept a number of steps in Peter Leeson’s argument for anarchy, “but [Leeson’s] bottom line … represents a huge leap of faith.” Citing the work of several important thinkers, Rodrik argues that “the problem with self-enforcing agreements is that they do not scale up.” Both theory and data show that complex, well-functioning social and economic systems require the enforcement of rules by government. “Those societies in which markets work best are the ones where the reach of the state is longer, not shorter.”

Florida State University economist Randall Holcombe argues that even if Leeson is right about anarchy, it doesn’t much matter. “Regardless of its merits,” Holcombe writes, “anarchy has no prospect as an actual policy option.” The bottom line is that government is popular in developed nations. Furthermore, anarchy may not be a “stable equilibrium,” in which case it might “coalesce into governments … potentially more oppressive and more destructive than those we see in prosperous areas today.” According to Holcombe, if we’re going to get a government anyway, the best approach to policy is to “make it smaller, less intrusive, and more libertarian,” not to make it go away.

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